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The views & opinions expressed are the dealers' own and they do not represent the views of UOBKH. The content is written in their personal capacity and is in no way related or associated to UOBKH. Please read disclaimer page here.

Tuesday, October 24, 2017

Singapore Plantation | BUY Bumitama (BAL SP) Wilmar (WIL SP); upbeat post-company visit

My view:

S'pore-Plantation-picks:

BUY:

1. Bumitama (BAL SP) Px/Tgt SGD0.73/1.03               
2. Wilmar (WIL SP) Px/Tgt SGD3.30/4.40

HOLD:

1. First Resource (FR SP) Px/Tgt SGD1.90/1.95
2. Golden Agri (GGR SP) Px/Tgt SGD0.38/0.34
3. Indo Agri (IFAR SP) Px/Tgt SGD0.45/0.50

Theme: Time-to-nibble!-despite-some-pushback-against-this-sector

1. UOBKH Research is still MARKETWEIGHT Asia Plantation after being sanguine on prospects over the last 12 months. Looking ahead, I am of the view that its time to re-visit this sector as share price is coming back to its previous lows. I like S'pore Plantation sector because:

        a. Lower inventory
        b. Slower production at 5% vs 6% previously
        c. Demand better-than-expected
        d. Bio-diesel blending from current 5% to future 7.5%

2. I am already seeing cash-flushed Investors nibbling on Asia Plantation sector & the picks thus far has been BAL SP, WIL SP & GGR SP on stock-specific catalyst. I am pretty confident they will follow up with more BUYs on the other S'pore/Indo/Mal Plantation-plays. Investors BUY inflows continue because they are expecting CPO prices uptrend as a) soybean planting down, b) stabilising oil prices.

3. UOBKH Research has MARKETWEIGHT on S'pore Plantation sector. We have HOLD calls on FR and GGR as we reckon that current prices have already factored in the higher production and earnings expected for 2H17. In the meantime, there are rising concerns on the potential CPO price weakness going into 2018 with another round of higher palm oil production and bumper soybean crops to come, while palm oil demand is expected to be stagnant.

4. BAL SP: UOBKH Research maintains BUY and target price of S$1.03, based on 13x 2018F PE. We like BAL for its young tree age profile, which spells strong production, as well as its hands-on estate management which has allowed BAL to consistently deliver a high oil extraction rate (OER).

5. WIL SP: I am of the view that its a good BUY now (given recent weakness; share price fell from sgd4.00 to sgd3.13) with my target of sgd 4.40. Wilmar should see steady contributions from all three divisions in 2017 on the back of higher sales volume and steady prices. It will embark on capacity expansion in China with the lifting of control on foreign companies. There is no change to our earnings estimates as key guidance is largely in line with our expectations.

Please contact us for the full version of this UOB Kay Hian research analyst report.

Thanks & Regards

Any expression of trading idea found on this website is for sharing only and does not constitute an invitation to trade or investment advice. Please read disclaimer page here.

Thursday, September 28, 2017

SATS SP | Buy; turning up from low

My view:

S'pore-Aviation-Svcs-Pick: BUY:

SATS (SATS SP) SGD4.67/5.30 | Theme: Share-price-turning-up-&-looking-at-further-+20%-upside

1.        Personally SATS SP is a good BUY at sgd4.60 because:

        a.        Trading near 4 sigma low of sgd4.60; points to a potential +20% upside
        b.        Gateway services revenue to go up
        c.        Weak inflight catering pricing likely to stabilise
        d.        We continue to value the company on an EV/Invested capital basis with WACC of 6.1% and growth rate of 3.1%
        e.        At our fair value,the stock will trade at 23.5x PE and 18x ex-cash, while offering a dividend yield of 3.5%

2.        UOBKH Research has a BUY on SATS SP Target price: S$5.40. The recent decline in stock price is not congruent with positive data out of Changi, which shows 4.3% and 11% yoy increases in flight movements and cargo throughput for July and August 2017. If September's data is equally strong, SATS 2QFY18's revenue growth is likely to exceed 1Q's.

3.        We are also not unduly worried about inflight catering revenue as SATs is likely to prevail if a pricing war continues. We also believe that pressure from airlines is likely to abate as yields stabalise.

Please contact us for the full version of this UOB Kay Hian research analyst report.

Thanks & Regards
 
Any expression of trading idea found on this website is for sharing only and does not constitute an invitation to trade or investment advice. Please read disclaimer page here.

Monday, September 25, 2017

Singapore Telco | Time to BUY Singtel ST /M1 /Netlink

My view:

S'pore-Telco-picks | Theme: Time-to-nibble-laggards

1.        Personally, I am of the view that its time to nibble the downtrodden S'pore Telco stocks i.e. M1 SP/STH SP despite consensus Fair Value at current price. These stocks are near their all-time low (apart from the GFC period of 2008/09) & is -1SD PE & ev/ebitda. Although there are some trepidation by the Funds, I reckon its a worthwhile bet & the upside hinges on a) M1/STH network sharing a success in terms of cost-savings & b) 4th Telco TPG not doing well.

                                        now                        network sharing ok (tgt)                network sharing not ok (tgt)
        a.        M1 SP                        sgd 1.78                sgd 1.98                                sgd 1.55
       
        b.        STH SP                sgd 2.60                sgd 2.62                                sgd 2.20

2.        UOBKH Research OVERWEIGHT S'pore Telco.  The entry of TPG Telecom as the fourth mobile operator in Singapore will be delayed to 2H18. Its financial performance is also likely to worsen in FY19. Given the acute execution risk in Australia, TPG has limited capacity to pursue an overly aggressive and disruptive strategy to gain market share in Singapore. BUY M1 (Target: S$1.98) and Singapore Telecommunications (Target: S$4.53). Yield-oriented investors should also consider NetLink NBN Trust (Target: S$0.93).



Please contact us for the full version of this UOB Kay Hian research analyst report.

Thanks & Regards
Any expression of trading idea found on this website is for sharing only and does not constitute an invitation to trade or investment advice. Please read disclaimer page here.

Thursday, September 21, 2017

Raffles Medical (RFMD SP) | Buy near 5-year low

My view:

S'pore-Healthcare-picks:

TOP-BUY:

Raffles Medical (RFMD SP) Px/Tgt SGD1.10/1.28 | Theme: Buy-near-5-year-low

1.        Personally, I am of the view that its best to BUY RFMD SP now at sgd1.10 because share price is well supported at its sgd1.05 5-year floor. Since our downgrade in April, share price has declined nearly 22% on expansion cost concerns and RMG is currently trading at a 2018F 15% discount to regional peers. This could be a potential accumulation opportunity for investors with a horizon of three years or more.

2.        UOBKH Research has MARKET WEIGHT on S'pore Healthcare.

3.        They upgrade to BUY RFMD SP with DCF-target price of S$1.28 (previously S$1.30)

4.        They are of the view that while earnings outlook for the next two years will likely be crimped by China start-up losses, they believe long-term growth over the next ten years will be significantly enhanced where capacity will more than quadruple.


 Please contact us for the full version of this UOB Kay Hian research analyst report.

Thanks & Regards

Any expression of trading idea found on this website is for sharing only and does not constitute an invitation to trade or investment advice. Please read disclaimer page here.

Thursday, September 14, 2017

Y Ventures (YVEN SP) | E-Commerce-play; outperformed +60% from low; another +70% ahead

My view:

Y Ventures (YVEN SP) | Px/Tgt (my tgt): sgd0.26/0.40 (my target based on discount to P/S of 1x vs Global Peers of 4x, our research likely to upgrade 28cts target price significantly upwards when company touch milestone)

1.        We have called a CONVICTION BUY & and will continue to update you as share price chug up.

2.        Looking ahead:

        a.        Catalysts for upside includes:
                i.        New Buyers that are keen on e-commerce play i.e. strong liquidity has already pushed up share price +20% above 22cts IPO price; likely to see more upside to 40cts
                ii.        Market Buyers: Strong Holders who believe that YVEN SP is significantly undervalued; likely to add more & see new Funds buying in ahead
                iii.        Tie-ups with well-known brands over the next 1 month that is profit-accretive

        b.         My estimates post Company Visit:

                                        Price                                                FY18 PE        FY19 PE        Global Peers FY18 PE
                i.        11 Jul:                 sgd 0.22                                        16x                11x                40x
                ii.        13 Jul:                sgd 0.30        +40%                                23x                15x
                iii.        28 Jul:                sgd 0.17        -40%                                13x                8x
                iv.        16 Aug:                sgd 0.15        -12%                                11x                7x
                v.        22 Aug:                sgd 0.195        +30%                                14x                9x
                vi.        14 Sep:        sgd 0.26        +30%                                18x                12x
                vii.        Tgt:                sgd 0.28        +10%                                20x                14x
                viii.        My tgt:        sgd 0.40            +70% upside ahead                30x                20x

Please contact us for the full version of this UOB Kay Hian research analyst report.
 
Any expression of trading idea found on this website is for sharing only and does not constitute an invitation to trade or investment advice. Please read disclaimer page here.

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